Leduc – Court of Quebec states that it lacks jurisdiction to disagree with a T4 slip that the taxpayer did not try to get corrected

The taxpayer received a lump sum of $100,000 in settlement of his complaints against his former employer. The settlement agreement did not specify any allocation of the sum between different heads of damages, and he was issued a T4 for the full amount (presumably in Box 66 or 67 as a retiring allowance).

Lévesque JCQ rejected the taxpayer's position that the sum was a tax-free amount received as compensation for harassment, discrimination, and abuse of power, stating:

In the absence of a precise allocation, it is impossible to reasonably attribute a defined portion of the amount paid to "moral suffering" or to the violation of the claimant's dignity. In a global settlement, the sum is rather used to extinguish all existing disputes, without determining which portion corresponds to which element. Such a lack of precision is incompatible with the burden imposed on the taxpayer.

Before so concluding, she also stated:

It is also significant that Mr. Leduc has never taken any steps to contest the T4 slip issued by his former employer … . [I]t is the taxpayer's responsibility to have a slip corrected that he considers erroneous. Until this is done, the Court does not have the requisite jurisdiction to modify or disregard a slip issued by the employer.

It is startling that the Court might delegate the determination of the very question before it to a party (the employer) who was adverse in interest to the taxpayer. Note that this is a small claims (informal proceedings) judgment which cannot be appealed (it is only subject to judicial review) with low precedential value (see also section 563 CCP).

Neal Armstrong. Summary of Leduc v. Agence du revenu du Québec, 2025 QCCQ 9207 under s. 248(1) – retiring allowance.